Definition of underpayment

invoice payment that is less than the amount billed. The seller may either bill again for the remaining amount, accept the amount received as full payment, or proportionately reduce the service or goods to be delivered. The option chosen depends upon the percentage of difference, the dollar value of the difference, and the seller's objectives. Many buyers write checks to the nearest dollar to avoid making cent calculations in their checkbooks. These payments are usually accepted as full payment, because the cost of billing for the remainder exceeds the amount still owed.Magazine and newspaper publishers frequently will make it a policy to accept underpayments as payment in full if the advertising sales revenue derived from the additional circulation is worth more than the payment differential. Other publishers will reduce the term of the subscription in proportion to the per copy value of the underpayment.